Brexit: Bank of England Report

Lord Lilley Excerpts

Thursday 29th November 2018 Lords Chamber

[Lord Bates]

The noble Lord has great expertise in economic analysis. He will recognise, therefore, that what we are discussing today is a scenario: it is a tool that is used to assess and stress-test risk. What is being put forward here is a worst-case scenario. I am not a pessimist; I am an optimist and a believer in the best possible outcome. I believe that that is the Prime Minister’s deal, which I hope will be supported.

[Lord Lilley (Con)]

My Lords, is my noble friend aware that the report assumes that imports into this country will decline by 15% because of what it calls additional customs checks? However, customs checks are carried out on the basis of risk. The customs computer selects 1% of consignments for physical checks. The head of Customs and Excise and the head of sanitary and phytosanitary services have said that there will be no additional checks post Brexit because there will be no additional risk attaching to imports into this country. We were told that the Bank of England was acting independently of the Government: is it acting in ignorance of the Government’s own policy?

[Lord Bates]

We do not want to detract from the fact that the Bank of England has a duty to stress-test the economy against a range of possible outcomes. Normally those scenarios are considered in private to inform the work of the various committees of the Bank in reaching their decisions. Perhaps uniquely in this case, they have been made public along with the assumptions which underpin them, as my noble friend has highlighted. However, these are worst-case assumptions. It is right that the Bank should look at a range of outcomes, but it is also right that we should consider other analyses, such as the analysis the Government produced yesterday.